Written by: @hmalviya9

Translated by: AididiaoJP, Foresight News

I believe the way of early financing for crypto projects needs to be rethought.

No flashy roadshow PPTs are needed, no promises of “changing the world in five years,” and no need to issue a fully diluted token valued at one billion dollars right from the start. All that is needed is a hardcore developer to tackle any part of the social trilemma—identity, reputation, or privacy—while exploring a brand new design space. Once they have developed an early MVP (minimum viable product), then give them 10 ETH. It should be done after, not before.

Developers should first spend their own money to create something, release it, and at least prove that the technology works at a fundamental level. Then, find 100 people who truly understand what they are investing in.

The first round is limited to 100 people, 0.1 ETH each

The first round is capped at 100 participants, each contributing 0.1 ETH, totaling 10 ETH.

These 100 spots cannot be filled through whitelist lotteries, KOL relationships, or fast fingers. It should assess whether a person understands the technology, the problems the developer is aiming to solve, and what product they are investing in.

Imagine if 100 investors could clearly explain why this privacy protocol is important, what problem it solves, and where the technology might fail. This creates a completely different investor base. You are not just raising money; you are building an early community—people who understand the product well enough to help make it successful.

Additionally, during the first milestone period, shares must be non-transferable unless predefined exit or refund rules are triggered. Because we don't want those who flip their investments the next morning.

Investors also need to contribute

Once the developer receives 10 ETH, they commit to a three-month roadmap and begin delivering. But investors need to make commitments too.

Some can test the product, others can find security vulnerabilities, some can write documentation, bring in users, translate interfaces, or help other developers integrate the protocol.

Not everyone needs to write code, but everyone should understand why their contribution is important. The core idea is to shift from passive capital to productive capital. It is not about buying tokens and waiting for others to pump the price; it is about helping create value for what you hold.

Incentives based on commitments can be introduced: investors complete useful, verifiable tasks to gain additional rewards; those who accept specific commitments but do not deliver may lose the collateral pledged for that commitment. Note, this does not mean the entire investment is forfeited. The goal is not to penalize token holders but to give economic weight to commitments.

Developers should also have something to lose

Developers should not receive all funding at once. The initial 10 ETH should go into a milestone escrow contract, released gradually based on progress. Developers must commit to delivering specific features before defined deadlines.

For example, the first month requires a functioning public testnet, the second month requires independently tested privacy or identity features, and the third month requires an application available to real users. These milestones must be measurable; phrases like “we are building the future of decentralized identity” do not count. That is narrative, not a milestone.

Developers should also have founder collateral or unvested token shares. If objectively verified violations occur, such as misusing escrow funds or fabricating milestone evidence, these portions can be forfeited. However, if the problem is harder than expected, leading to missed deadlines, it should not automatically mean losing everything. There should be review, dispute resolution, and clear extension rules.

We want hardcore developers willing to take technical risks, not those who only dare to work on safe projects because one failed experiment could destroy them.

Let the market discover valuation through delivery

Assuming the developer completes the first milestone. The product works, user numbers increase, the technology advances, and the community grows. Why should the second round raise funds at the same valuation? It shouldn’t.

Set four funding stages: Seed round of 10 ETH after MVP release; second round of 20 ETH after the first-month milestone completion; third round of 40 ETH after the second-month milestone completion; public round of 100 ETH after the third-month milestone completion. A maximum total of 170 ETH, contingent upon completing the milestones and finding enough investors.

Each round should aim for a higher valuation, but the market should decide whether that valuation is reasonable. Developers propose valuations based on progress, and investors submit bids, with a transparent auction determining the clearing price. If the market does not accept this valuation, that round will not proceed at that price.

Each round must have a deadline. Funding cannot continue indefinitely, and it cannot raise more money just because the market is bullish. Each new funding round should be contingent upon the commitments from the previous round being fulfilled.

Let early investors exit, but not at the expense of the market

When the second round opens, early investors should have the opportunity to sell part or all of their shares to new incoming investors. This should not be unrestricted market sell-offs but structured secondary allocations.

New investors can choose to purchase newly issued tokens to fund development or buy existing shares from early supporters. The allocation ratio for primary and secondary sales should be fixed and disclosed before each round begins.

This creates liquidity without needing the project treasury to underwrite investor exits. No one is forced to sell. Those who want to stay can, and those who want to leave can do so when there is real buying interest.

Reward those who stay and contribute

Imagine someone invests in the seed round, spends three months testing the product, bringing in users, reporting bugs, and helping the project grow. Why should they receive the same returns as someone coming in during the final public round?

Non-transferable contribution reputations, milestone participation scores, and long-term holding incentives can be introduced. Additional tokens can be unlocked based on verified contributions. Governance rights can be tied to reputation, while safeguards are set to prevent wealthy early investors from permanently controlling the protocol.

Investors should not receive more rewards merely for coming early, but should earn more rewards for staying and helping create value. All reward rules, dilution, and vesting schedules should be disclosed before the first contributor sends money.

Make commitments programmable

Ethereum has already given us useful building blocks: ERC-20 for transferable tokens, ERC-721 or ERC-1155 for participation certificates, and, where applicable, ERC-8004 style proxy reputation infrastructure, with account abstractions for managing commitments.

Combined with escrow contracts, milestone proofs, challenge periods, and forfeiture mechanisms, the results will resemble more of a “market of human commitments” rather than a traditional Launchpad.

One side commits to delivering, while the other commits to contributing. Both parties stake something, and both receive rewards when measurable commitments are completed. The system should distinguish between malicious actions and honest failures.

The public round should be the last step, not the first

For years, we have been doing this backward: issuing tokens, creating hype, raising millions, and then slowly getting things done. I want to reverse this order.

First, create something. Find 100 tech-savvy believers. Raise 10 ETH. Deliver for three months. Discover valuations through progressively amplified rounds. Let early investors choose to exit or continue. Reward genuine contributions. Only when the product is usable, the technology has been tested, and real adoption has occurred, should the project attempt a public round of 100 ETH.

Create hype around real progress. Before tokens are widely circulated, let adoption happen first. Let the technology speak for itself.

Of course, securities laws and fundraising restrictions still apply. Smart contracts themselves cannot make investment issuance legally compliant.

But this mechanism is worth exploring. Because I don’t believe the crypto industry needs another thousand Launchpads. What we need is a market where capital makes commitments, developers make commitments, and code executes the protocol as reasonably as possible.

If both sides fulfill their commitments, both should share in the upside. If we can build this well, perhaps the next generation of crypto wealth will come from those who truly helped build something useful, rather than just from those who got in ahead of everyone else.

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